Kenmore Undressed

Foreclosure: A Sad Reality

I’ve avoided using the “F” word because it’s one of the most devastating situations for anyone to go through. It symbolizes the anxiety and fear that many home owners face even in good markets. Even one of my neighbors here in Kenmore went into foreclosure recently. Fortunately (so far), the Seattle Area has not seen the huge numbers of foreclosures that CA, NV and numerous other states have experienced. Nationwide, foreclosures are up 115% as compared to Washington State at 20%. See more about this in the September 19th Seattle PI article entitled:  “Foreclosure rate here below U.S. Average”.Also, I’ve attached a powerful 12 minute film clip from http://mortgagenewsdaily.com   that shows the sad reality of foreclosure in an area of the country that has been hard-hit. It’s worth watching. Just click on the pictures below:

Insatiable Curosity: A Realtors Biggest Headache!!!

Ouch! Being curious can be very interesting but it can also hurt my brain. At the beginning of each month I like to ponder local real estate statistics. Because my practice focuses on North King and South Snohomish Counties, I spend time thin-slicing some of the general numbers to try and find out what’s really going on out there in the marketplace. Today I wanted to look at the September sales figures for King County. I think you’ll find this interesting:

Of the 1283 single family homes that sold in September, it’s interesting to note that the average days-on-market is 72 days. Frankly, I find this quite positive in very difficult times. If I were a betting man, I’d say these sellers and their agents did a good job of gaging the market. In order to examine this more closely, I chose to focus-in on those homes that sold from $400,000 - $449,999. I did this because the price is close to average for King County. This particular price-point sold in 64 days which, even in a good market, is a respectable number. So what happened? Here are some details:

1) Only 57% of the homes in this category actually sold in the 64-day time period. 84% of the remaining 43% took well over 100 days to sell.

2) Only 6% (25) of the 1283 sales sold for 100% of the list price. On average, homes sold for 94% of list price. 25 of the homes sold for under 90% of list price.

3) A surprising 95% of the sold homes were re-sale.

Based on these findings, I believe it’s more important than ever for homeowners to think carefully about selling their homes in the current market. There is obviously a group of buyers out there who have money to purchase a home. How you go about pricing and marketing your home are extremely important. Also, if you choose a real estate agent to help you sell your home, make sure he/she knows your local market. Make sure he/she has a concrete plan to “correctly” market your home. Finally, make sure the potential agent has your best interests in mind.

Insatiable Curosity: A Realtor’s Most Important Asset

 I’m one of those guys who is curious about almost everything. When it comes to my reading list I’m usually plowing through 3 or 4 non-fiction books, several magazines and a huge number of publications from my Google Reader. I like to stay informed. It’s a big part of my job as a real estate agent and, believe me, one can never keep up with the mountain of information out there. I thought it might be fun to show you how I go about the process of formulating some of my professional opinions about the real estate market. Let’s take the current financial meltdown as an example. There are a lot of economists claiming that the one commodity most needed in the market today is ”confidence.” I don’t disagree with this idea, but how do I articulate the notion with some facts my clients can understand? Here’s how I research subjects like this:1) I first went to Inman News which is an excellent source of information. There I found an article entitled “ Divided views on homeownership benefits” which points out that a large percentage of both home owners and non-homeowners intend to stay in their current residences for the next 12 months because of the turmoil in the marketplace. If you want to read the whole, fascinating article click on the picture below:You’ll notice that this article has a link to a survey (highlighted). This survey is entitled ”Financial Mortgage Fallout Creating ’Crisis of Confidence’ Among Home Buyers“ and was compiled by Trulia which is one of the most comprehensive, well-respected real estate websites today. The article is an enlightening and somewhat disturbing assessment of homeowner confidence in the current market. Click on the picture to read the whole article. Once I read these articles, I can then pass on relevant information to my neighbors here in Kenmore, WA. As it turns out, most Americans still believe in home ownership but many buyers are putting their home search on hold until the economy settles down. I believe that knowing these facts makes me a better realtor and helps me serve my clients in an intelligent way. 

Kenmore Statistics: Sales Figures from September

It’s October 1st and we are quickly coming to the end of a tumultuous year in real estate. September wasn’t exactly an active month for the sale of single family homes in Kenmore. I ran reports for the sales from this year and September of 2007. Sales were down -55%: 18 homes sales in 2007 and 10 this year.

Here are the sales from last month:

Several key statistics are of note: 1) even though the report showas a 100.14 Sale Price/List Price ratio, the actual number is more like 94% and, 2) days-on-market are 138. Compare this to last year:

You’ll note that the days-on-market were only 49 last September. The Sale Price vs List Price ratio was slightly higher at 97%. One bright spot is the fact that the median prices rose slightly from last year.

The real challenge facing the market today is the inability of buyers to obtain financing due to the severe tightening of credit. We may see this trend continue until Congress passes the current bailout legislation.

Some Fun Real Estate “ART”

Sometimes art captures perfectly the times we live in. I thought it would be fun to post these wonderful bronze characters given the fact that money and housing have been in the news 24 hours a day. They are called: The Marriage of Money and Real Estate, installed just off Roosevelt Island (NYC) on December 1, 2005,  sculptural installations by Tom Otterness.

As a Realtor working in a fairly tough market, it’s nice to know that someone has a sense of humor about real estate.

Pictures by Wally Gobetz

The Cost of Selling a House in the New Millenium - A New Series

There are few things in life more emotionally charged than the value we place on our home. When the day comes to sell our house, we instantly become “value experts.” We begin to pay attention to the other houses for sale in our neighborhood or town. We hit the internet to compare prices. We seek out valuations from sites such as Zillow. We become arm-chair economists. We go to the bookstore and buy all the new tomes about selling a house. WE KNOW IT ALL!

Armed with all of this information, we then interview every real estate agent we can get our hands on. After all the interviews we discover, to our utter surprise, that it costs A LOT of money to sell a house. Some Realtors want 6% of the sale price in commission! Yikes! But, then there are other agents who will put us on the local multiple service for several hundred dollars. This gets us on the Internet but the rest of the process is left up to us. Hm, that sounds good but all our research revealed that there’s a lot to selling a house. Even without an agent, it looks as if we’re going to spend money. So we have a couple of choices:

A) Do I sell my own house (know as For Sale by Ower or FSBO) or

B) Do I hire a Real Estate Agent?

But wait, are there other choices?

Allow me to answer this: YES, there are other choices you have when selling your home. In this series we shall take a close look at how a house gets sold in the current market, what the costs are and why there are more options for homeowners than ever before.

So why hire an agent? Stay tuned for the answer.

Pictures courtesy of:  giveawayboy, crawfishpie, rogiro on flickr.com

A $700,000,000,000 Bailout, Golden Parachutes and The Invisible Hand

It’s hard to wrap my mind around $700 BILLION dollars. Look at all those zeros! What’s even more difficult is to ponder all the unintended consequences of using almost $1 Trillion tax-payer dollars to help Wall Street out of it’s troubles. One interesting byproduct of the bailout is the “shocking” revelation regarding executive golden parachutes. Since the 1980’s, executive compensation has been increasing at ridiculous rates. I think most Americans were convinced by the “investment class” that they actually deserved the exorbitant severance packages they received for running large corporations. My, oh my, Americans should have been paying closer attention. Allow me to illustrate my point with the following story:

I had a conversation with a good friend last week. He’s been a Realtor for close to twenty (20) years. He told me that he had to file for bankruptcy recently. He said his home had gone into foreclosure and that his “back was against the wall.” As is the case with so many real estate agents today, business has withered to almost nothing. The affects of the mortgage crisis have come down hard on our industry. And you know, my friend isn’t one of those speculator-type agents who purchased a number of homes as “investments” in the hope of becoming rich quick. He’s a hard-working professional with lots of experience and expertise. Right now he’s having a hard time finding a new job. His story is emblematic of the current state of our economy and it would seem almost cliche were it not for the news that came out a couple of days later: Washington Mutual Bank was seized by Federal Regulators. It was the largest bank failure in American History.

It’s bad enough that WAMU failed. It’s downright absurd that Alan H. Fishman was the new chief executive officer of the company for a total of 17 days when he bailed-out with a golden parachute worth close to $20 million dollars. Looked at another way, Mr. Fishman was paid $50,000 per hour (assuming he worked 24 hours a day whilst on the job). He didn’t even have to get results. It seems he just had to show up. Let’s be honest, we all have a picture in our heads about this type of person:

This morning Congress announced a Draft Proposal on the Financial Rescue Legislation which contains language regarding the limitation of CEO compensation:

• Limits on excessive compensation for CEOs and executives

– New restrictions on CEO and executive compensation for participating companies:

– No multi-million dollar golden parachutes

– Limits CEO compensation that encourages unnecessary risk-taking

– Recovers bonuses paid based on promised gains that later turn out to be false or inaccurate

One can only hope that this portion of the legislation survives the legislative process. Already I can hear the corporate apologists whining and complaining that running a company is a tough job. Pardon me for being so blunt, but I’m sick and tired of hearing how tough it is on the wealthy and privileged . I’m particularly tired of the notion that it takes some sort of Ubermensch to run a corporation.

My friend, who has worked hard for many years, is not part of any bailout. He represents millions of other Americans who have worked hard and played by the rules only to discover that Adam Smith’s “invisible hand” (the wonders of an unfettered market place)  is propaganda. It’s a philosophy that has been repeated over often enough that we actually believed it. I can only hope that this bailout will actually help the current market situation. Perhaps we will be better off in several years, but for now let’s all make a promise to ourselves: let’s be more vigilant with those in Wall Street who would have us believe they really care about us.

Pictures: capitalist  pig, http://flickr.com/photos/urbanblitz/, Washington Mutual Tower,  http://flickr.com/photos/cloganese/, Bailout http://flickr.com/photos/emdot/2880848408/

New Construction Numbers in Kenmore, WA - Resale Is Doing Much Better

It should be no surprise that new homes (those built in 2008) have not been selling at the brisk pace of several years ago. Far from it. Since January 1, 2008, twenty-five (25) newly constructed homes have sold in Kenmore.  Resale has been doing much better at 101 sales. 50% of these homes sold for under $500,000. All of the new homes sold for over $500,000. I believe that the current market trumoil is taking its toll on home sales in general; however, I also think that new construction is facing some tough competitioin from the resale market. There are almost 2-times as many resale properties on the market right now. They are selling for about 8% less than original list price which means those sellers are being more flexible in their negotiations.

Overall, sales of new homes has been lethargic. Please turn your attention to the charts below:

As the turmoil in Wall Street unfolds and we move into the 4th quarter and Presidential elections, I wonder how the real estate market will fair? Properties are selling in Kenmore in the face of some fairly scary economic times, so it’s not the end of the world…yet. The important thing to recognize is that you should do your homework before jumping into (or out of) the real estate market.

Open Houses: Are They Effective? Are They Necessary?

I recently conducted a market analysis for a family who wants to sell their home. They asked me whether or not open houses are effective or necessary. Real estate agents get this question from potential clients all the time. It’s a good question, yet,  I’m not sure it’s the right question. The right question is: If you conduct open houses, what will happen? It’s a Steven Covey thing: “Begin with the end in mind.” The answer should be: “They help sell your house.” Well do they? Check out the video below for one possible outcome: 

Funny, huh! Look, I have years of experience listing homes and holding open houses and I’ve drawn my own conclusions about their effectiveness (purpose) . I’ve also asked colleagues with decades of experience what they think about open houses. Here’s the concensus:

In today’s marketplace, open houses do not help sell a home. The last decade has brought technological changes to the marketplace that have essentially eliminated the need for open houses. When my wife and I were looking for our first house (in the late 80’s) open houses were the only way one could approach a neighborhood.  Realtors had to spend time at broker’s opens and regular Sunday open houses to examine the inventory. Today, the Internet has transformed this experience with on-line photos, virtual tours (in HD photography!), personalized home websites, etc.. The average buyer has access to a tremendous amount of information regarding  particular homes, neighborhood/city statistics and demographics. Certainly, 99.99% of consumers will visit homes to touch and feel the inventory; however, the fundamental mechanics for doing this have changed. 

So what does help sell a house? I believe that sellers and their agents need to spend more time discussing and implementing the right marketing campaign for a home. This should include but is not limited to: print media, addition to the Multiple Listing Service, yard sign and directional signs (if they are permitted………they aren’t legal in Kenmore), flyers, etc.. The real important marketing occurs in a whole new array of Internet/cyberspace arenas, especially through Internet Syndication. In the future, I’ll explain more about Syndication. Think of it as blasting your home out on the Internet to a huge number of potential customers. Unfortunately, many agents have no idea (or money) to accomplish this.

Ultimately, most agents like to hold open houses to meet new clients rather than actually sell the house they are holding open. The bottom line is that very few homes are actually sold because the agent held an open house. And a final thought: Today, fewer and fewer homes are being held open. In my community, Kenmore, WA, very few agents hold open houses on the weekends with the exception of the new-construction sites.  

Real Estate Statistics: September is Ending Soon

It’s always sobering to take a look at things going on in your own neighborhood, especially when so much attention has been focused on the “big picture” market challenges. Let’s take a moment observe what’s going on here in Kenmore:

There are a lot of active listings in Kenmore today. The majority of these homes are selling at the  $450,000 - $600,000 price point. Of the 214 active listings, over 70% have reduced the list price. The average days-on-market don’t look terribly bad; however, since the beginning of September there have only been 5 closed sales. Some good news is that there are 26 pending sales; however, most of these homes have only gone pending after well over 5 months on the market. Let’s hope some of them close at the end of this month.

The charts below are sobering:

I’ve expanded the report below so you can see the details.

The numbers speak for themselves. Almost 36% of the homes for sale in Kenmore are new construction. The average days-on-market are running close to 200. As I mentioned above, very few of the pending sales right now received offers quickly. It’s taking a long time to sell a house in Kenmore.